Nomura International says it's giving investors in the U.K. and Europe something they've never had before: emerging markets minus the downside risks.
Taking advantage of new regulations governing the industry, the bank is offering its first capital protected fund dedicated to emerging markets equities, the Global Emerging Markets 80% Protected Portfolio Fund.
The product offers exposure to six funds managed by Goldman Sachs, Citigroup, Pictet, Pioneer Investments, Franklin Templeton Investments and WestAM, aiming to capitalize on rampant interest in the sector which generated a record $350 billion private investment last year.
Nomura's head of fund sales, Gary Topp, reckons the product can capture £100 million in its first year, split equally between retail and institutional investors. It will profit from its first-mover position to lure risk-averse savers looking for higher returns and money managers stung by past crises, he says.
"It's particularly pertinent for emerging markets where lots of people are attracted to the upside but there are systematic risks to the downside," Topp said.
Topp stresses that the fund, available to investors in the U.K., Germany, Italy and Spain, remains attractive despite widespread confidence in a new-found stability in developing economies. Those markets remain sensitive to the performance of the U.S. and could also be threatened by swings in commodity prices.
Nomura's fund guarantees 80% of its highest net asset value, charging management fees of 0.75% for retail and 0.15% for institutional investors.